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AIB tumbles a further 10pc as investors run scared of Irish banks


Bank of Ireland CEO Francesca McDonagh

Bank of Ireland CEO Francesca McDonagh

Bank of Ireland CEO Francesca McDonagh

AIB shares tumbled a further 10pc on Wednesday, to trade barely above €1, with rivals Bank of Ireland and Permanent TSB also weaker.

Irish bank shares are the worst hit among European peers over the past year. AIB's stock is now trading at around a third of the price seen in the first weeks of this year and is less than a quarter of its 2017 flotation price of €4.40 a share.

Bank of Ireland shares fell more than 4pc yesterday and are also roughly a third of prices at the start of the year.

Ireland's two biggest banks are the worst performers in the Bloomberg Europe Banks and Financial Services Index over the past year, even though Ireland is not among the countries worst hit economically or in health terms by the Covid-19 outbreak.

Political uncertainty is a factor according to Diarmaid Sheridan of Davy Stockbrokers. He cites the ongoing lack of clarity over the direction and shape of the next government here as compounding the economic uncertainty caused by the pandemic.

For international investors, the economically interventionist tone of political debate and prevalence of what could be seen as anti-banks rhetoric - such as demands that lenders forego interest on mortgages availing of payment breaks - impacts sentiment, he said.

Also weighing on market sentiment is the fact shares have already fallen so far they risk being dropped from more liquid share indices.

AIB is due to publish a quarterly financial report on Tuesday, May 12, that will include a guide on the hit to date from the Covid-19 outbreak. Bank of Ireland's update is a day later.

Davy analysts has both AIB and Bank of Ireland shares marked to 'outperform', seeing the current price falls as overdone, although noting the unusual degree of uncertainty in the current market.

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